But experts contacted by TheStreetSweeper, including skeptics in both the energy and financial sectors, have expressed clear doubt about those numbers. For example, an executive at Nabors Industries (NYSE: NBR) -- a $7.6 billion energy giant that decided against buying those assets for itself -- estimated that Miller actually wound up with just $25 million to $30 worth of assets, offset by $40 million worth of liabilities, through that transaction instead.

"That deal had been on the Street for over a year; everybody and their brother had looked at it. I'm a geologist, with 54 years of experience, and I can't see how anybody can write that up on their books for $350 million . There are not $350 million worth of assets there." -- Jordan "Digger" Smith
Nabors Industries

“That deal had been on the Street for over a year; everybody and their brother had looked at it,” said Jordan “Digger” Smith who manages energy projects for Nabors – which actually operated Miller’s new properties – all across the country. “I’m a geologist, with 54 years of experience, and I can’t see how anybody can write that up on their books for $350 million … There are not $350 million worth of assets there.”

Miller did not respond to messages from TheStreetSweeper, including an email with a detailed list of questions, seeking input for this story.

If its lenders decide to play hardball, Miller could pay a very high price for any ongoing delay. Following a default, the creditagreement indicates, Miller faces an even steeper interest rate – set to jump from a minimum of 9.5% to credit-card levels of at least 16.5% instead – and could lose access to additional funds, with demands to repay the millions it has already borrowed, as well.

Power and Greed

At least one of the three lenders supplying those funds – the firm that, in fact, brokered the deal – has evidently delivered some painful blows to its clients in the past.

But Miller has inked multiple deals with Bristol regardless. Indeed, Miller has not only relied on Bristol for financing and consulting services, recordssuggest, but the company has also used the firm to score one of its favorite toys as well.

Under a standard mortgage deal (with 20%, or $1.7 million, down and a 30-year term), records indicate, Boruff would face house payments totaling $544,000 a year – a sum that exceeds his entire $500,000 base salary – and almost $120,00 in annual taxes to boot. Late last year, however, Miller granted Boruff a generous bonus that will at least double – and potentially quadruple -- his cash compensation to between $1 million and $2 million, while offering him more stock on top of past stock options (priced at just 33 cents a share) that he can sell in a pinch down the road.

“The abandoned assets had incurred significant losses and were unable to generate sufficient positive cash flow to sustain ongoing operations,” Pacific noted in court filings related to the case. So “as a result of the debtors’ marketing efforts, the debtors believe that the buyer’s offer has been fully tested by the market and thus constitutes fair and reasonable consideration for the sold assets.”

CIE officially closed the deal the following month, records show, immediately selling itself to Miller that same day. At that point, records show, Miller formally introduced Graham as its president and touted the “instrumental” role he had played in securing the company’s new assets.

According to corporate filings, Graham scored a $200,000 signing bonus when taking the job – a sum equal to his entire annual salary for serving as president – and warrants to purchase 1 million shares of stock, almost half of them at just a penny a share, as well. The company never asked compensation experts to help determine his pay, records show, or sought prior approval from shareholders to issue the huge block of cheap warrants that he received.

Meanwhile, as it turns out, Vulcan never even provided the funds that it had promised to Miller for the Alaska deal. Vulcan transferred that cash to another account, corporate filings show, with Miller settling for alternative financing – at a higher interest rate – after losing access to those funds instead.

Truth and Consequences

Miller has allegedly broken a few important promises of its own since Boruff first arrived on the scene.

Miller nevertheless relied on GunnAllen to arrange a critical joint-venture deal –with the brokerage firm and Boruff promised a combined 5.6% stake in the company for their services – and likely came to regret that transaction. Aided by GunnAllen, records indicate, Miller convinced Wind City Oil & Gas to buy $4.35 million worth of company stock and then allegedly blocked its partner from exercising an option that would allow it to reverse that deal. Wind City sued shortly after Boruff left GunnAllen to work at Cresta Capital, recordsshow, with Miller soon hiring a Cresta subsidiary (Consoleum) to work on settling the complaint.

In mid-2008, some two-and-a-half years after Miller forged that doomed partnership, the company finally negotiated a deal that promised to end its costly legal woes. With the assistance of Cresta and its own future CEO, recordsshow, Miller raised $19.625 million by assigning some Tennessee leases to a larger energy company and gave Wind City $10.65 million of that – more than double the cash it had received from its former partner in the first place – so that it could put the dispute to rest.

At that point, records show, Miller retained Sherb as its independent auditing firm. Six months later, armed with audited financial statements, Miller escaped from the Pink Sheets and returned to the OTC Bulletin Board once again.

“One of the first orders of business when I became CEO,” Boruff proclaimed at the time, “was to put in place the systems and relationships to assure that Miller always meet (regulatory) filing deadlines.”

The month before Miller raised the cash that funded its big Wind City settlement, records indicate, the company allegedly promised to sell the leasing rights that it had just signed away to another firm called CNG Gas – at a much lower price – instead. Miller soon faced a new lawsuit filed by CNX as a result, records show, but actually scored a legal victory for a change when a trial court agreed in late 2008 to dismiss that complaint.

Meanwhile, Miller has long since rewarded Boruff for arranging the rival deal that triggered that lawsuit. The company named him as its top executive just two months after it inked that controversial transaction, records show, paying him a sign-on bonus of $300,000 that actually exceeded his entire $250,000 base salary for his first year. The company also granted him 250,000 shares of restricted stock and options to purchase another 250,000 – at just 33 cents a share – as well.

Miller then threw in an even bigger reward for Boruff’s “extraordinary efforts” in settling the Wind City case, corporate filings show, issuing him 2.5 million shares of restricted stock to compensate him for the “significant” payout he sacrificed when leaving Cresta to join the company. But Miller had by then already paid off Cresta itself, records indicate, giving the firm a combination of cash and warrants before showering its new CEO with a much larger stock-based award for related (if not identical) services.

Miller has painted an awfully impressive picture of Boruff in the meantime, portraying him as a veteran real estate broker – responsible for developing golf courses, convention centers, hotels and condominiums – who “created several start-up ventures that grew into multimillion-dollar companies” before he ever began his lengthy real estate career.TheStreetSweeper searched an extensive news database for evidence of those projects, however, and came away almost empty-handed in the end.

Boruff showed up on a list of players involved in a couple of real estatedevelopments more than a decade ago, but he generated no coverage for larger projects – such as golf courses or convention centers – at all. He failed to attract media attention for the “multimillion-dollar companies” that he reportedly launched, either, although court records show that he did file for bankruptcy when doing business as CeeBee’s Rock ‘n Roll Café back in 1994 and wound up slapped with numerous liens in the years that followed.

Friends and Foes

Miller employs another key executive tarnished by a past bankruptcy as well.

The month after Miller installed Boruff as its new CEO (and Sherb as its independent auditing firm), recordsshow, the company hired Paul Boyd to serve as its finance chief. Boyd clearly needed the job, records indicate, since his former employer – where he served as CFO for the previous seven years – had just filed for bankruptcy protection four months earlier.

Miller actually welcomed Voyticky to the company in the spring of last year, records show, when it appointed him to its board and assigned him a seat on its audit committee. But the company hired Voyticky’s consulting firm to help it with financing activities a few months later, records show, so it gave another director (who met independence requirements) that committee assignment instead.

Like Boruff before him, however, Voyticky sounded like a prize catch upon his arrival to the Miller executive suite. When the company introduced Voyticky as its new president, records show, it portrayed him as an accomplished investment banker – who actually served as vice president of Wall Street heavyweight Goldman Sachs (NYSE: GS) in the past – and never mentioned any ties to the penny-stock world, where Miller had spent most of its own life, at all.

Aches and Pains

In fairness, Miller has also installed some actual veterans of the energy industry to help it run the show.

When Miller purchased CIE -- issuing warrants for 3.5 million shares of stock, priced at a penny to $2 a share, as payment -- the company also hired CIE’s top three executives as part of that celebrated deal. Miller awarded all of them multi-year contracts with six-figure salaries, recordsshow, but terminated the CFO Troy Stafford barely five months later.

According to courtdocuments, Stafford arranged a key consulting agreement with an outfit known as VAI that ultimately led to the acquisition deal. In recent months, recordsshow, both Stafford and VAI have sued Miller for allegedly failing to honor its obligations after that acquisition closed.

Stafford sued the company in May, seeking more than $650,000 in cash (for wages and severance) and warrants valued at roughly $2.7 million at the time. He may need those funds, recordsindicate, since he faces a default judgment in a separate case that accuses him of swindling an investor – by selling 20% of a bogus seafood company – to raise money for his own 20% stake in CIE ahead of its lucrative sale.

The month after Stafford sued Miller, recordsshow, VAI filed an even bigger lawsuit against the company. According to that complaint, VAI played a critical role in Miller’s acquisition of CIE but -- despite written agreements in advance – never received any payment for its services. VAI is now seeking court-ordered enforcement of those alleged agreements, with demands for warrants to purchase 1.75 million shares of Miller stock (the equivalent of 4.4% of the company’s outstanding share count) priced at just a penny a share.

Meanwhile, despite its stunning gains, Miller has since lost some analyst support of its own. C.K. Cooper downgraded Miller from buy to hold in March, recordsshow, and then followed up this week – shortly after the company missed the deadline to file its audited financials -- by dropping coverage of the name altogether.

Notably, on the very day that Miller reported a delay in filing that crucial report, The Motley Foolsounded its own alarm about the company’s stock. It portrayed Miller as a risky highflier – its shares boosted by possible accounting games -- that could soon find itself spiraling back to earth.

“Miller Energy Resources continues to work its slight-of-hand tricks on paper,” the Fool declared, “but it’s not fooling me!”

* Important Disclosure: TheStreetSweeper, through its members, began establishing a short position in Miller Energy Resources (MILL) on June 24 and has now shorted a total of 129,431 shares of the company’s stock at an average price of $7.07 a share. It expects to profit on future declines in the stock by covering its short position at a lower price and will fully disclose the details of its transactions as they occur.

Update: TheStreetSweeper covered 39,500 shares of MILL on July 28 at $5.42 a share. It covered the remaining 89,931 shares of its short position in MILL on July 28 at $3.76 a share and no longer has a position in the company's stock. TheStreetSweeper may choose to establish a new short position in MILL in the future and will promptly disclose the details of any additional transactions in the company's stock if and when they occur.

As a matter of policy, TheStreetSweeper prohibits members of its editorial staff from taking financial positions in the companies that they cover. To contact Melissa Davis, the editor of this website and the primary author of this story, please send an email to editor@thestreetsweeper.org.